2016 (11) TMI 1177 - AT - Central Excise

Levy of duty - Manufacture - complete food tray as served to the passengers on board the aircraft - Held that - the issue is squarely covered by the decision of this Bench in the case of Taj Sats Air Catering Ltd. Vs. CCE, Delhi-II 2016 (3) TMI 777 - CESTAT NEW DELHI where it was held that Out of Food preparations as contained in the food tray served to the passengers on board, admittedly, the appellants did prepare dal, roti, rice, curry etc. and supplied the same in trays and bowls covered with aluminium foil. However, these are not the items on which Central Excise duty is sought to be demanded. The Central Excise duty was said to be demanded on the full value of the final complete food tray as served to the passengers on board the aircraft. There is nothing in the impugned order which will substantiate and support the claim of the Revenue on the taxability of such complete food tray on whole value. As such we find that the demand is not sustainable on this ground. Excise duty not leviable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of excise duty on food items served by an Air caterer without payment of duty; Time-barred demand.

Analysis:
The appellant, an Air caterer, was engaged in manufacturing food items like Dal, Rice, Curry, etc., which were served to passengers along with packed items and supplies from airlines. The lower authorities demanded excise duty on all items in the tray as branded food preparation, claiming the tray had a logo. The appellant argued that the demand was time-barred.

Upon review, the Tribunal referred to a previous decision involving a similar case and observed that the Department had not proven the sustainability of the demand based on brand-name. The Tribunal also noted that the demand was issued after a significant period, invoking the extended time period due to alleged suppression of facts. However, the Tribunal found no substantial grounds for the extended demand, as there was no evidence of fraud or intention to evade duty. The Tribunal emphasized that the appellant's main business was catering to airlines, and similar caterers were not paying excise duty on such meals. Consequently, the Tribunal concluded that the demand was not sustainable both in terms of manufacture and time bar.

Ultimately, the Tribunal found no merit in the lower authorities' decision and set it aside, granting relief to the appellant. The appeal filed by the appellant was allowed, overturning the demand for excise duty on the food items served by the Air caterer and ruling the demand as time-barred.